Greek Prime Minister Under Pressure To Resign

(We're updating this post as the story develops. Hit "refresh" and scroll down to see our latest additions.)

Under intense pressure from the European Union, Greece's prime minister has scrapped the idea of asking the country to vote on whether to accept the terms of a bailout package.

Prime Minister George Papandreou made the announcement in a speech to parliamentary colleagues. The AP reports Papandreou also invited the opposition to join negotiations on a bailout. His opponents, reports the AP, "reversed themselves and agreed to broad austerity measures in exchange for a European bailout."

The AP reports that Greece's finance minister confirmed the country would not hold a bailout referendum.

I believe deeply in democracy, the values inherent in democracy, and when I announced the referendum ... our partners wanted everything to go like clock-work, to work robot like .... if we can't respond to our commitment the issue of the euro will be on the cards.

The decision of the referendum would be a guarantee of us staying in the eurozone. What is of priority is not the referendum but whether as a country we are willing to enforce the commitments [outlined] in the October 26 agreement.

I told our partners that if we had political consensus, if we could vote through the rescue package [with the main opposition party] there would be no need for other solutions.

In his speech, Papandreou also ignored calls for him to resign, but the prime minister is still facing a vote of confidence on Friday.

Our original post, and earlier updates:

It's looking less and less likely that the Greek people will be asked to vote on a referendum concerning a European Union/International Fund financial bailout package that might save their nation from going into default — but only if Greece makes serious budget cuts and takes other austerity measures designed to get its fiscal house in order.

And if Prime Minister George Papandreou's plan for such a referendum is scrapped, that might prevent a "financial contagion" from spreading to other weak European nations. European and IMF leaders have warned that the uncertainty of a referendum (and the likelihood that Greek voters would reject the bailout plan) could mean no more aid for Greece.

As of midday in the U.S.:

-- Papandreou, who has been under pressure to resign, had told his cabinet that "I will be glad even if we don't go to a referendum, which was never a purpose in itself."

-- The prime minister's government appeared headed for a confidence vote in parliament at midnight Friday in Athens.

The government led by Greek Prime Minister George Papandreou could collapse within the next few hours.

"Speculation is rampant that when Papandreou meets the [Greek] president he's going to offer to step down and ask for a coalition government to be formed. But the FT's Kerin Hope in Athens says, after speaking to a senior member of the ruling Socialist party, that there have been such rumours before — that he would step down in favour of a national unity government. But that didn't happen."

And The Associated Press says that "Greece's embattled Socialist government was on the point of imploding Thursday as a revolt against Prime Minister George Papandreou's planned referendum on the country's hard-won international bailout package gathered pace." The wire serve adds that:

"His shock referendum decision Monday angered European leaders and many of his own party lawmakers, several of whom have called for the prime minister to step down and a cross-party national unity government to be created in order to safeguard the bailout. Speculation that the referendum pledge may be abandoned alongside a caretaker government has helped calm frayed nerves in the markets."

We wrote yesterday that leaders of other European nations told Papandreou that Greece would not get its next aid installment — $11 billion — unless the austerity measures are OK'd. The BBC's Justin Rowlatt said on Marketplace yesterday that "if there's no Greek rescue, then there's likely no stomach — not to mention not enough money — for an Italian rescue, or Spain, and so on down the line."

Update at 1:25 p.m. ET. Eurozone Leaders Will Meet Tonight:

After Greece announced it was scrapping plans for a referendum, eurozone leaders said they would meet on the sidelines of the Group of 20 meeting in Cannes, France to discuss a way forward.

The AP reports:

The official says the meeting will include the leaders of France, Germany, Italy and Spain as well as representatives of the ECB, the EU and the IMF. He was speaking on condition of anonymity because of the sensitivity of the issue.

Update at 11:25 a.m. ET. More From Papandreou On Possibility Of Scrapping The Referendum.

Reuters reports that in a statement to his cabinet, later released by the prime minister's office, Papandreou said:

"I will be glad even if we don't go to a referendum, which was never a purpose in itself. I'm glad that all this discussion has at least brought a lot of people back to their senses. ... I will talk to (opposition leader Antonis) Samaras so that we examine the next steps on the basis of a wider consensus."

Update at 11:15 a.m. ET. Referendum Might Be Scrapped?

Reuters, which is live-blogging developments, writes that "a proposed Greek referendum on the country's bailout package will be scrapped if ruling and opposition parties strike a deal to resolve the country's political crisis, an official from the prime minister's office said. 'There is no reason to have a referendum if there is consensus between the two large parties,' the official said."

And the BBC, on its live-blog, says "a statement from Mr. Papandreou's office, cited by AP news agency, said he was prepared to drop plans for the referendum. 'The referendum was never an end in itself,' Mr Papandreou told the cabinet. 'We had a dilemma - either true assent or a referendum. I said yesterday, if the assent were there, we would not need a referendum.' "

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